Hong Kong Treasury Weighs Investing in Crypto Assets Amid Growing Global Interest

Key Takeaways

• Hong Kong has not ruled out long-term investments in crypto assets.
• The region recently proposed a new tax policy to exempt crypto gains tax for institutional investors.
• Hong Kong has been pushing to become a leading crypto hub in Asia.

Hong Kong has considered a long-term investment in crypto assets among its fiscal reserve and other investments.

The move comes as the region continues its push to become a global hub for global dominance in crypto and blockchain innovation.

Region’s Crypto Asset Investment

Acting Secretary for Hong Kong Financial Services and the Treasury Joseph Chan Ho-lim told local media that the treasury has not ruled out long-term investments in crypto assets.

The Hong Kong Monetary Authority (HKMA) said that although crypto is not the key focus for Exchange Fund investment, it continues to invest in diversified asset classes around the globe.

The lawmaker revealed that digital assets represent a “very small proportion” of the HKMA’s Exchange Fund.

Chan Ho-lim said that the HKMA was focusing on improving the regulative framework of virtual assets in the region.

Hong Kong’s Crypto Push

The region has been attempting to push itself as a dominant crypto force in Asia through a number of bold strategies, including a fast-track of exchanges and a new tax policy to exempt crypto gains tax.

In November, the Hong Kong government issued a 20-page proposal outlining plans to exempt hedge funds and other institutional investments from paying taxes on crypto asset profits.

According to a Financial Times report , the proposed tax exemption could apply to a wide range of investment assets, including private equity, hedge funds, carbon credits, private credit, and foreign real estate.

The region could potentially be viewed as an attractive destination for wealthy crypto investment if approved.

In October, Hong Kong’s securities regulator said it would start fast-tracking licenses for crypto exchanges by the end of the year.

Speaking at Hong Kong Fintech Week, Eric Yip, Executive Director at the Securities and Futures Commission (SFC), claimed the market was “already trading in sizeable volumes” and was “too big to ignore.”

The SFC confirmed it was fast-tracking applications from 14 crypto exchanges, including major players in Western players such as Crypto.com.

“Instead of going through a document-based vetting process, we have conducted risk-based on-site inspections on all applicants to assess critical areas such as the keeping of client virtual assets, cybersecurity, and their processes for anti-money laundering and know your customer,” Yip said at the annual conference.